A National Strategy Funds State Political Monopolies

Image

Ed Gillespie, a longtime Republican strategist, said: “People who want to see policies enacted, and see things tried, are moving their activity to the states, and away from Washington. There is a sense that you can get things done.”CreditCreditMary Altaffer/Associated Press

By his third year as chairman of the Alabama Republican organization, Mike Hubbard believed his party had just about everything it needed to win control of the State Legislature.

He had a plan: an 88-page playbook for the 2010 campaign, with detailed, district-by-district budgets and precise voter turnout targets. He had candidates: doctors, lawyers and small-business owners, most of them political novices recruited with an eye toward the anti-establishment fervor roiling the country.

What Mr. Hubbard did not have was enough money. Alabama law barred corporations, deep-pocketed natural allies for state Republicans, from giving more than $500 to candidates and parties — a limit that did not apply to the state’s unions.

So began a nationwide quest for cash that would take Mr. Hubbard, plan in hand, to the Republican Parties in states like Florida and Ohio, to a wealthy Texan who was one of the country’s biggest Republican givers and to a Washington organization that would provide checks from dozens of out-of-state corporations, among them Exxon Mobil, Google, Facebook and Altria.

Exploiting a loophole in the state law and a network of political action committees in Alabama and Washington, Mr. Hubbard shuffled hundreds of thousands of out-of-state dollars into the Republican organization in Alabama, vastly outraising the state Democratic Party. On Election Day, Republicans won majorities in both the State Senate and House of Representatives for the first time since Reconstruction — and Alabama joined the rapidly growing fraternity of states where government is controlled by a single political party, now the largest it has been in more than half a century.

Alabama’s transformation was the product, in part, of a sophisticated political apparatus designed to channel political money from around the country into states where conditions were ripe for Republican takeover. In 2010, the effort achieved striking success, moving a dozen states to sole Republican control, including presidential swing states like Ohio and Pennsylvania.

In 2012, a resurgent Democratic version — financed chiefly by labor unions and wealthy liberal donors rather than corporations — began to catch up, spearheading Democratic takeovers in Minnesota and Colorado.

Their combined work has helped remake the nation’s political landscape. Republicans or Democrats control both the legislature and the governor’s office in 36 states, the most in 60 years. Twenty-three states are now solely controlled by Republicans, and 13 solely by Democrats. In two others — New York and Washington — one chamber is jointly controlled.

In some states, the shifts are largely organic, the product of Latino immigration, economic transformation and other demographic forces. But elsewhere, the strategic deployment of campaign cash has helped consultants and donors accelerate or arrest states’ natural drift toward one party or the other, defying national election trends or voter registration advantages.

“People who want to see policies enacted, and see things tried, are moving their activity to the states, and away from Washington,” said Ed Gillespie, a longtime Republican strategist who has played a central role in efforts to swing state legislatures to Republican control. “There is a sense that you can get things done.”

Their party’s success has empowered Republican lawmakers in dozens of states to redraw legislative districts on both the state and federal levels, potentially ensuring their party’s control of the United States House of Representatives for the rest of the decade.

But those successes are also paving the way for what amounts to a vast, real-world experiment in lawmaking: At a time when Washington appears hopelessly divided and gridlocked, elected officials in one-party states have aggressively reshaped government policy, whether legalizing same-sex marriage and marijuana, abolishing taxes and regulations, or restricting guns or labor unions.

Their labors have propelled Democratic- and Republican-controlled states in starkly divergent directions. California, where the state capital is controlled entirely by Democrats, has expanded the range of nonphysicians who can perform surgical abortions, while states held by Republicans, like Texas, Oklahoma and Kansas, passed new limits.

In Connecticut, dominated by Democrats, lawmakers approved legislation that for the first time allowed citizens to register on Election Day to vote. But in North Carolina, Republicans, who control state government for the first time in more than a century, have outlawed same-day registration and passed some of the most stringent voter identification rules in the country.

Colorado, held by Democrats, has limited magazines in weapons to 15 rounds and required background checks for private gun sales, while Kansas, where Republicans enjoy legislative supermajorities, passed a rule opening most city and county buildings to people carrying weapons.

Interviews with more than 50 donors, strategists and elected officials involved with those efforts, along with a review of thousands of pages of public records, revealed how the Democratic and Republican state machines share an array of strategies and goals.

Both sides rely on interlocking networks of political action committees, party organizations and nonprofit groups, often based in states with forgiving campaign finance rules, that work in concert to raise contributions and shuffle money to thousands of local races around the country. In some states, liberal or conservative donors have established political nonprofits that function like shadow parties, often exempt from the contribution limits or disclosure requirements that apply to candidates and traditional parties.

Not unlike a political version of Cayman Islands banks, the networks allow political strategists to sidestep regulations and obscure the source of funds. Campaign contributions that would be banned or restricted in one state can be sent to a state where the rules allow money to flow more freely, often scrubbed of the identity of the original donor. Some groups work behind the scenes to orchestrate “money bombs” of smaller contributions from hundreds of different donors, allowing the groups to provide candidates with large doses of cash — fingerprint-free — even in states with low contribution limits.

Both networks arose to help Democrats and Republicans skirt the McCain-Feingold campaign-finance law, which sharply cut the flow of money from national parties to the states. But over the last three years they have been turbocharged by the Supreme Court’s Citizens United decision, which made it easier in many states for unions, corporations and the wealthy to pool money for large independent expenditures.

Today, state and even local races increasingly are financed by checks written hundreds or thousands of miles away. A five-figure contribution from a Colorado energy executive passes through a bank account registered in Pennsylvania, where it is mixed with money that ends up in the campaign coffers of an attorney general candidate in Iowa. Business money raised in Michigan, where corporate contributions to candidates are banned, fuels campaigns in Florida and Maine, where such contributions are legal.

Much of the money passes through a handful of Washington-based organizations: From 2006 to 2010, the volume of campaign cash flowing from Beltway-based groups to state parties and candidates almost doubled, to $139 million from $79 million, according to an analysis by The New York Times of data collected by the National Institute on Money in State Politics.

That figure is widely expected to grow in this year’s midterm elections: Strategists say donors are persuaded that dollars spent in relatively low-budget state elections can go further in advancing their agenda than money burned in the ceaseless trench warfare of Washington.

Image

Robert McKay, the chairman of the Democracy Alliance, said, “Progressive ideas can be hampered — or be promoted — at the state level.”CreditJim Wilson/The New York Times

“The donors are saying there’s nothing going to happen in Washington anytime soon,” said Robert McKay, chairman of the Democracy Alliance, an elite club of liberal donors around the country that has been closely involved in efforts to move swing states into the Democratic column. “But conversely, progressive ideas can be hampered — or be promoted — at the state level.”

A Rare Opportunity

In early 2010, a little-known group called the Republican State Leadership Committee approached Mr. Gillespie, the party strategist.

Once part of the Republican National Committee, the group was forced by McCain-Feingold to reorganize as an independent organization, and had built up a respectable record of electing Republican state officials. But with furor growing over President Obama’s health care law, officials at the leadership committee believed they had a rare opportunity to topple Democratic majorities around the country.

Mr. Gillespie had a sterling résumé in Republican politics, with stints as head of the Republican National Committee and as chairman of the Virginia Republican Party. He was also a founder of one of Washington’s top lobbying firms, with an enviable Rolodex and deep ties to the Beltway’s trade associations.

Mr. Gillespie came on as chairman and chief rainmaker. Armed with PowerPoint slides showing long lists of likely pickup opportunities, he took his pitch to Wall Street investors in New York, energy executives in Dallas and dozens of corporate government relations offices in Washington.

Republicans could do more than just flip a few state legislatures, he told them. They could use their new statehouse majorities to build a firewall in the United States House of Representatives: congressional districts so favorably drawn for Republicans that the party’s House majority would endure for a decade.

“It was three yards and a cloud of dust,” Mr. Gillespie said of his hunt for dollars. “It was a constant working, and working, and working until it broke through.” (Mr. Gillespie is now talking about making his own bid for elected office, a run for the United States Senate in Virginia.)

The group’s fund-raising shot upward, bolstered by bigger contributions from longtime donors — such as tobacco, pharmaceutical and telecommunications interests — and new money from the growing network of post-Citizens United conservative political groups. By Election Day, the leadership committee would raise $30 million, its biggest two-year haul ever.

The bulk of that money went into a carefully laid assault on Democratic lawmakers in 19 states, planned in tandem with efforts by the Republican Governors Association. In some states, the groups handed cash directly to state parties or candidates. Elsewhere, they spent millions on hard-to-track radio and television advertisements.

The leadership committee’s nationwide base of donors lent candidates distance from the source of the money benefiting them, and allowed the committee to maneuver around varying rules that apply to campaign spending in different states. Instead of spending money where it was raised, the Republican State Leadership Committee could allocate checks to affiliates in other states. Other checks could be pooled into a central fund in Washington and then distributed in large chunks to state Republican Parties, to candidates or to campaigns by independent groups.

Alabama was an obvious target. Long after its voters had become overwhelmingly Republican, Alabama retained Democratic majorities in the Legislature. Mr. Hubbard, himself a state representative, and officials at the leadership committee believed just one well-organized push would send the Democrats into permanent minority status.

Yet state law prohibited corporations from giving more than $500. And other potential donors were unwilling to give to the party at all, in case the takeover effort failed. “There were a lot of people and companies who didn’t want to give to us directly because they feared the Democrats,” Mr. Hubbard said.

Many of those donors were willing, however, to give to a Republican group in Washington. After meeting with leadership committee officials, Mr. Hubbard, along with his finance chairman, State Senator Del Marsh, began raising money for the group. If they did well enough, Mr. Hubbard believed, the leadership committee would make a similar investment in Alabama.

“We had to become players for them,” said Mr. Hubbard. “Their job is to flip legislatures, and we wanted them to help us flip Alabama.”

During the 2010 cycle, the leadership committee took in close to a million dollars from Alabama donors. And over the same period, the group directed about $1.4 million into an Alabama-registered political action committee, all of it from out-of-state corporations. Because the state allowed unlimited transfers between political action committees and parties — a loophole long exploited by Democrats and Republicans alike — the leadership committee could shuffle all of that money to the state party and a pair of committees controlled by Mr. Hubbard and his team.

The arrangement also offered donors a way to help Mr. Hubbard without their checks showing up on the Alabama party’s public filings. One such supporter was the Poarch Band of Creek Indians, which operates several large casinos on tribal land in Alabama.

The tribe was wary of the rapid expansion of non-Indian gambling in the state, particularly the proliferation of small bingo parlors competing with their resort casinos, and stood to benefit if antigambling Republicans took control of the Legislature. But precisely because they opposed gambling, few Republican state lawmakers or candidates would accept the tribe’s contributions.

After meeting with Mr. Marsh and other Republicans, said Robert R. McGhee, director of government affairs for the tribe, the tribe chose a different approach: It donated $350,000 to the leadership committee. When the contributions were later disclosed, critics accused Mr. Hubbard of using the Washington group to launder the money by exchanging it with other contributions.

A spokesman for the leadership committee said that the Poarch Creek contributions had been allocated to the group’s administrative account, to pay for overhead and other expenses, and that the staff members involved in arranging the checks no longer worked at the organization. Mr. Hubbard said there had been no agreement to directly swap cash.

“The conversation was, ‘I’ve got some people in Alabama who are very interested in giving money to help elect Republicans to state legislatures, and I would hope that if we help raise money for you, you will help us win in Alabama,’ ” Mr. Hubbard said.

Swap or no swap, public records suggest that many of the contributions the leadership committee raised in Alabama made their way to races in other states.

About $260,000 from Alabama donors, for example, was assigned to a Pennsylvania account originally set up to collect checks from federal political action committees. (Pennsylvania is one of a handful of states that allow such contributions to be spent directly on state races.) But none of the money raised was spent in Pennsylvania. Instead, the Alabama contributions were pooled with hundreds of thousands of dollars in political action committee checks and individual contributions from around the country. Beginning in August 2010, the leadership committee transferred $860,000 from the Pennsylvania account to the Republican Party in Iowa to assist its candidates.

Image

Gun-rights advocates at the Democratic-controlled State Capitol in Denver on Jan. 9.CreditMatthew Staver for The New York Times

The Republican Governors Association made similar transfers. In Michigan, for example, a political action committee set up by the governors association raised $8.4 million. Virtually all of it came from a roster of elite donors outside Michigan, such as Bob Perry, the Texas homebuilder, and David Koch, the billionaire industrialist. Most of that money was transferred to the Michigan Republican Party.

While out-of-state donors were funneling millions of dollars into Michigan, Republicans were sending millions of dollars back out to the governors association in Washington. All told, Michigan donors contributed $8.5 million to the association. That is roughly as much as the group spent on independent advertisements to help elect the Republican candidate for governor, Rick Snyder, on top of the money transferred directly for the Michigan party.

Rich Robinson, the head of the Michigan Campaign Finance Network, a watchdog group, said he believed the transactions were designed in part to allow Michigan businesses, which could not give directly to Mr. Snyder, to exchange their contributions for money from out-of-state individual donors, who could legally donate. “It appeared to be a currency swap to obfuscate the actual sources of money,” Mr. Robinson said. “I had never seen anything like this before, particularly at this scale.”

More than $5 million of the Michigan money raised by the governors association, for example, was a corporate money from the Michigan Chamber of Commerce. Two million dollars of that went to association affiliates in Maine and Florida, where corporate contributions are legal.

A spokesman for the governors association, Jon Thompson, said that all of its contributions had been disclosed in campaign filings and that the association made sure its transfer stayed within each state’s restrictions on the size and source of contributions. “The R.G.A. raises funds to elect and support Republican governors,” Mr. Thompson said, “and we invest that money in full compliance of the law wherever we see any opportunity to make a difference in accomplishing our objective.”

Only when the dust from the 2010 elections settled did the full scale of the Republicans’ success become clear.

The governors association spent $99 million and ended with Republican control of 29 governorships, up from 23, the highest number for either party in a decade. Republicans controlled 25 legislatures around the country, up from 14, including in pivotal swing states such as North Carolina, Wisconsin, Ohio and Pennsylvania. In Alabama, Republicans won supermajorities in both houses of the Legislature. Mr. Hubbard’s colleagues elected him speaker of the Assembly, while Mr. Marsh became Senate leader.

The Alabama Republican Party’s finances during that period have since come under scrutiny: Some of the party’s records have been subpoenaed by the Alabama attorney general, Luther Strange, a Republican, though the scope of his office’s inquiry is unclear, and Mr. Hubbard has denied any wrongdoing.

But the impact of Republican governance in Alabama has been undeniable. In the party’s first year in control, the Legislature passed — and the governor signed — more than 30 major pieces of legislation, including new tax breaks for businesses, ethics overhauls and restrictions on abortion and union organizing.

The Gay-Rights Battle

In May 2012, a former congressional aide named Kirk Fordham stood at the front of a packed ballroom in the basement of the Mandarin Oriental hotel in Washington, a few blocks from the Jefferson Memorial. Before him sat more than a hundred of the country’s leading gay donors and advocates, all of whom had pledged to keep the proceedings confidential.

It was the third day of an annual conference known as OutGiving, organized by the Gill Action Fund, a Denver-based group, and Mr. Fordham, the group’s executive director, was clicking through a presentation known as “punishing the wicked.” As the donors watched, Mr. Fordham scrolled through names, pictures and, in some cases, videos of state lawmakers and other elected officials, each one an opponent of gay-rights legislation. All would be targeted for defeat.

Image

Representative Mike Hubbard, a Republican in Alabama, said, "We had to become players for them. Their job is to flip legislatures, and we wanted them to help us flip Alabama.”CreditWilliam Widmer for The New York Times

Founded by a press-shy software entrepreneur named Tim Gill, the fund had racked up a string of wins in state races, helping elect dozens of lawmakers who supported gay rights — or unseating their opponents — in Iowa, Colorado and New York. In 2012, Mr. Fordham’s presentation showed, Minnesota was rich with potential targets.

Two years earlier, Republicans had won an upset victory there, taking control of the State Senate and the State House for the first time in nearly four decades. The new Republican majorities had sought to enact a wave of conservative or pro-business policies, battling with the new Democratic governor, Mark Dayton, over tax cuts, education spending and a measure to rein in unions.

One bill in particular had the Gill Action Fund’s attention. Minnesota already had a law on the books banning same-sex marriage. But over Mr. Dayton’s objections, Republican lawmakers had put a question on the November ballot asking voters to enshrine that ban in the State Constitution, making it less vulnerable to repeal.

Other deep-pocketed gay-rights groups, both in Minnesota and around the country, were already mobilizing to defeat the marriage initiative. The Gill group had a complementary goal: helping Democrats win back the Legislature, so that Republicans would not get a second chance.

By the spring of 2012, two strategists for the group had already spent weeks in Minnesota, traveling to swing legislative districts, sorting through turnout data and gauging the quality of the candidates Democrats were recruiting. But the state has some of the lowest donation limits in the country. A candidate for State Assembly could accept only up to $500 from individuals, unions or political action committees.

So instead of cutting a few big checks, the fund picked a handful of candidates and then organized a blizzard of small contributions to them from dozens of donors. As Election Day neared, out-of-state contributions began to flow into the campaign accounts of seven Democratic candidates for the Minnesota Legislature. The checks came from Philadelphia, from Los Angeles and San Francisco, from New York City and the Hudson Valley — at least 200 contributions in all from at least 50 donors around the country, each one at or under the state’s limit.

Kevin Dahle, a Democratic candidate for Senate facing an uphill campaign in a mostly rural part of Minnesota, raised almost a fifth of his campaign chest from out-of-state gay-rights supporters. Paul Rosenthal, running in a House district in suburban Minneapolis, received about a quarter of his contributions from the same list of donors.

While Mr. Gill’s team organized contributions directly to candidates, it was also joining up with one of the most successful state-based political operations anywhere in the country: a liberal nonprofit group called the Alliance for a Better Minnesota.

Two years earlier, the alliance had played a pivotal role in helping make Mr. Dayton governor, in part by persuading an array of outside interests — unions, abortion-rights supporters and environmental groups — to pool money and coordinate their political spending.

A handful of big in-state donors anchored the alliance’s fund-raising, led by Minnesota labor unions and Alida Messinger, a wealthy philanthropist and Rockefeller heiress formerly married to Mr. Dayton. The commitments by in-state donors, and the prospect of giving Democrats control of state government, in turn helped draw out-of-state money for 2012. While the state Democratic Party paid for direct mail and radio ads, the alliance organized a major campaign of television and Internet advertising.

Because the Alliance for a Better Minnesota is a nonprofit organization, not a campaign committee, it is not required to disclose a full roster of its donors. But state law requires the group to disclose sources of funding for its political spending, providing a glimpse of how the 2012 effort was financed.

Image

A gathering in Raleigh, N.C., last July to protest the Republican-led government.CreditGerry Broome/Associated Press

Ms. Messinger contributed a total of $1.3 million, both directly and through two other fund-raising committees set up to manage donations. An additional $937,000 — about a quarter of the total raised — came from out-of-state donors, among them the National Education Association, the teachers union, and a Washington-based organization called America Votes. Three donors affiliated with the Gill Fund provided $90,000.

The fund and other national gay-rights groups also raised millions of dollars from out of state for efforts to defeat the anti-gay-marriage initiative. Separately, another Washington-based group, the Democratic Legislative Campaign Committee, contributed $400,000 to help finance a joint polling and research effort for the alliance and the Democratic Party. The committee, which raises money from unions, wealthy individuals and corporations to help elect Democratic state lawmakers, also contributed $700,000 directly to the state party to help elect legislative candidates, making it one of the party’s largest donors.

By Election Day, Democratic candidates and committees had amassed a nearly unprecedented cash advantage over the Republicans. The alliance poured an additional $2.5 million in advertising into 32 races. Democrats won all but six, picking up majorities in both chambers of the Legislature.

In May 2013, Minnesota became the 12th state to legalize same-sex marriage. The Gill Fund is now raising money for incumbent lawmakers who voted for the measure, an official there said.

“No Republican or Democratic lawmaker from any state, red or blue, needs to question whether or not we will have their back when they do the right thing,” Mr. Gill said in a statement. “We will.”

Looking for Targets

The blossoming interest of donors has fueled what both sides describe as an arms race: Liberal and conservative groups are now moving quickly to identify and set up shop in states where demographic shifts and hot-button policy disputes are opening up opportunities to radically reshape state government.

They have been propelled, in part, by the vivid successes of their opponents. North Carolina, a state won by Mr. Obama in 2008, has since become one of the country’s foremost laboratories of aggressive conservative policy making.

In Colorado, a state where voters outlawed same-sex marriage a half-decade ago and Republican voters outnumber Democrats, Democrats swept to full control of state government in 2012. Over the last year, they have enacted sweeping changes on gun control, marijuana legalization and civil unions. Some of the legislation has provoked a fierce reaction from voters: Two Democratic state senators who supported the gun-control bill were ousted in recall elections in September, while a third recently resigned to avoid being forced into a recall vote.

“There’s undoubtedly more interest in what’s happening in the states right now,” said Michael Sargeant, executive director of the Democratic Legislative Campaign Committee, which raised significantly more money in 2012 than in any previous cycle since its founding. “There is less of a knee-jerk need among some donors that their contributions need to stay in their state.”

This year, Republicans are targeting states like West Virginia. The state has long been reliably Democratic, but disputes over the regulation of coal mining and environmental rules have alienated important Democratic constituencies, providing what Republicans believe is a clear chance to flip the state Republican over the next few election cycles.

Charles and David Koch, brothers whose philanthropic and political network has helped fuel a Republican resurgence in the onetime union strongholds of the industrial Midwest, have also stepped up their political activity in the states; they hope to rebound in places like Virginia, where a Democrat won the governorship in 2013, and consolidate earlier victories in states like Michigan and Wisconsin.

Liberal donors are following suit, focusing on states like Arizona, where Latino immigration has expanded the pool of potential Democratic voters. Last spring, the Democracy Alliance began a $10 million State Initiatives Fund, aimed at building liberal organizations and winning back legislative seats in 12 states, including North Carolina and Florida. In Maine, a consortium of progressive groups financed by the hedge fund billionaire S. Donald Sussman, an alliance member, is looking to unseat Gov. Paul R. LePage this year and put both the governor’s office and the Legislature under Democratic control.

In a measure of their ambition, liberal groups are even targeting some states in the Old South, convinced that superior organization and money can help them begin to win back governorships and legislative seats. Interest has focused on Georgia, which has experienced significant Latino immigration and where 600,000 voting-age African-Americans are not yet registered to vote.

Last year, there were fewer Democrats on the ballot in Georgia than in any year on record, according to Bryan Long, the founder of Better Georgia, a liberal group. In recent months, Mr. Long — inspired by states like Minnesota — has circulated proposals to labor leaders and to donors in Georgia and around the country to build a $5 million political infrastructure for nonprofit groups, outside the traditional party organization.

“We’ve seen huge wins in other states,” Mr. Long said. “And here in Georgia, we’ve learned what’s possible: If you fight back, you win. And if you fight smart, you win more.”

Sarah Cohen and Monica Davey contributed reporting.

One-Party Rule: Articles in this series will explore the
politics and policies of states controlled
entirely by one party.

A version of this article appears in print on , Section A, Page 1 of the New York edition with the headline: A National Strategy Funds State Political Monopolies. Order Reprints | Today’s Paper | Subscribe